Hälsa som humankapital: avkastningen på tidiga investeringar

Understanding the determinants of and returns to human capital is of major importance for societies. While economists traditionally have focused on human capital in terms of education, there has recently been an explosion of research aiming at understanding the economic returns to health capital and the role of early key inputs in the production of health capital. Partly inspired by findings in medicine, particular interest have been taken in the role of early investments in children’s skills and health. The availability of “big data”, i.e. data sets with millions of observations, has transformed economic research in this area. 

The traditional economic analysis of health builds on the demand-for-health model, formulated by Michael Grossman in the 1970s (Grossman 1972). The model laid out the foundations for thinking about health as both a consumption and capital good that depreciates and can be invested in. In the model, economic incentives affect people’s willingness to invest in their own health; returns to good health include an increased number of healthy days in the future and the cost of health investments includes both prices of health care inputs as well as time costs. 

While the demand-for-health model transformed the way economists think about health, important elements of the model were takes as given. The individual was assumed to be born with a certain level of initial health and the model exclusively dealt with investments in adult health. Building partly on evidence from the medical literature, the year 2000 winner of the Nobel Memorial Prize in Economic Sciences, James Heckman, laid out the foundations for the economic analysis of investments in early life health and skills (see e.g. Heckman 2007). In this framework, parents invest in their children’s human capital and make decisions about investments at the different stages of childhood. The model incorporates a number of insights for health (and skills) production: (1) inputs may be more productive at certain stages of childhood than others and (2) health produced at one stage augment the health attained at later stage, and (3) health produced at one stage of childhood raise the productivity of investment at subsequent stages. 

The latter two features of the model, labeled self-productivity and dynamic complementarity, have two important implications. First, even small differences in early health investments could have large long-run effects due to a multiplier effect. Second, the equity-efficiency tradeoff that exists for later life investments does not necessarily apply to early investments; such investments can both have a high return and at the same time reduce inequalities in health. 

The policy implications of such predictions are profound. On a fundamental level, if the long-run effects of early insults are large, the greater is also the value of early interventions. Knowledge about critical periods would also reveal at which ages interventions generate the largest returns. Moreover, knowledge about under what circumstances early insults matter the most would point to targeted interventions towards subgroups or towards situations where the interventions generate the greatest value. 

Although the research on the importance of early life health and early investments is developing rapidly, many key questions remain unanswered. What are actually the long-run consequences of poor early life health? Do health interventions during childhood actually have long-term returns? During which periods during childhood do early insults matter most and during which ages are interventions most effective? How can we identify such periods? And under what circumstances does poor early life health matter the most? How do for instance business cycles fluctuations during adulthood interact with early life health in determining economic success? How is poor early life health transmitted across generations? 

The proposed project attempts to provide answers to questions such as these. Swedish administrative data registers provide an extraordinary resource for successfully being able to do so. The possibility of linking various types of registers, and using external information on the introduction of policies, reforms, and interventions, allows researchers to shed light on issues that are difficult to analyze in most other countries.

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